Moody's may up Tom Brown

Moody's Investors Service said it placed under review the ratings of EnCana Corp. (senior unsecured Baa1) for possible downgrade and the ratings of Tom Brown Inc. (senior implied Ba2) for possible upgrade.

The following ratings were placed under review: EnCana's Baa1 senior unsecured notes, P-2 commercial paper, and prospective Baa1 senior unsecured shelf and Tom Brown's Ba2 senior implied, Ba2 issuer, Ba3 senior subordinated, prospective Ba2 senior unsecured shelf, prospective Ba3 subordinated shelf, and prospective B2 preferred shelf stock ratings.

Moody's said the ratings reviews were prompted by EnCana's announcement that it had agreed to acquire Tom Brown for $2.7 billion.

Under the terms of the agreement, EnCana will purchase all the outstanding shares of Tom Brown for $48 per share in cash. Tom Brown also has about $400 million of debt outstanding. EnCana has arranged a $3 billion bridge financing with Royal Bank of Canada to fund the acquisition. The company also indicates it intends to conduct a significant asset divestiture program, with expected proceeds of $1 billion to $1.5 billion.

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